The Best Way to Exchange Large Sums of Money

by Kevin Johnston
Exchanging money safely requires a better method than mailing it.

When you need to pay or receive a large sum of money, you must take precautions. Whether the exchange occurs locally or overseas, if cash is lost, you can't replace it. You need a record of the transaction through reputable financial institutions. This gives you a great deal of protection on your transaction.

Bank to Bank

Before considering the avenues for transferring a lot of money, eliminate the ones that do not involve banks. You certainly can send money directly to someone through services such as Western Union and even PayPal, but these are not the safest and best ways. Insist that the other party in your transaction have a bank account. That way, your bank and the other person's bank can check identification, confirm the transfer and take responsibility for handing the money over.

Wire Transfer

You can go to your bank and set up a wire transfer. You do this through a bank officer, who will help you fill out the necessary forms. Part of your security in this type of transaction is the person sending the money must have the actual cash in an account. You pay a fee for this service, but you can think of that fee as insurance. You have the protection of two banks overseeing the transaction.

Automated Clearing House

Consider ACH transfers as an alternative to wire transfers. The money gets sent electronically. That means one bank debits the sending account and the other bank credits the receiving account, with no actual cash changing hands. As of Dec. 20, 2012, banks do not charge for ACH transfers. Some banks offer the ACH transfer option online, so you don't have to actually go to your bank. However, the other person's account must be linked to yours through ACH. You must ask the other person to link to your account. The bank gives instructions on how to do this. Basically, once all account information is entered, a small deposit of a few cents gets sent to check the connection. After that you can send your large sum.

ACH Vs. Wire Transfer

Wire transfers occur in real time. When you need the money to arrive immediately, this is your best option. ACH transfers can take two to three days to be completed. If you don't care about the delay and you want to save yourself the wire transfer fee, an ACH transfer may be your best bet. Note that with ACH, you can continue to transfer money between accounts, and that means the other person can withdraw from yours without notifying you.

About the Author

Kevin Johnston writes for Ameriprise Financial, the Rutgers University MBA Program and Evan Carmichael. He has written about business, marketing, finance, sales and investing for publications such as "The New York Daily News," "Business Age" and "Nation's Business." He is an instructional designer with credits for companies such as ADP, Standard and Poor's and Bank of America.

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